The future of remittance can make us global citizens

Transferring money overseas can one day be instant and free - if consumers, companies and governments embrace new technology

Most banks now offer mobile apps on top of their traditional services: You can use a digital wallet on your phone to pay for chicken rice, or invest in the Straits Times Index from your sofa.

But how much has really changed for the everyday consumer, especially as an increasing number of Singaporeans live and work abroad?

In the remittance industry, digital innovation has the potential to transform the way money moves around the world.

A recent study by Jupiter Research showed that international money transfers conducted via mobile and online services will make up 36 per cent of formal remittance by value this year, growing to 44 per cent by the end of 2021.

While we are seeing digitisation of the money transfer industry, the changes may not have been as transformative as expected. We still see queues outside cash-based remittance services on weekends as people send money overseas.

When asked about the future of sending and receiving money abroad, 55 per cent of Singaporean respondents believe overseas money transfers will one day be instant, while 46 per cent believe these transfers will one day be free.

Speed has improved across the industry, but instant cross-border transfers are still rare.

In technology terms, sending money is no different to sending an e-mail, but in many countries it still takes more than a day for payments to be processed.

One challenge to real-time international payments is the issue of security, as the delay in transfers can be caused by anti-fraud or measures that require documents to be submitted manually.

However, innovative authentication methods present opportunities for the industry to meet consumers' demand for immediacy.

As for the vision that international money transfers will one day be free?

Several disruptors have sprung up here offering money transfers with low fees. The rise of such disruptors will force financial institutions to lower prices and improve their technology, and at the end of the day, customers will be the winner.

However, there is still an inertia preventing consumers to switch from their traditional providers to cheaper alternatives. Often, this is because people are unaware of costs charged by the banks that are hidden in the exchange rate.

Today's providers need to better equip consumers with information. The first step is to be transparent about all costs, so that consumers can make better decisions. The second step is for customers, companies and governments to embrace all the possibilities that technology offers such that sending money becomes as instantaneous as sending an e-mail.

Perhaps soon, those queues at Lucky Plaza will be replaced by the touch of a screen.

The writer is head of banking, TransferWise, an international money transfer platform